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Lean Metrics
“Data is of course important in manufacturing but I place the greatest emphasis on facts”
Taiichi Ohno
Lean Metrics
Objectives
Understand the importance of measurements to each level of operations and management
Understand measurables◦ Meanings, calculations, importance
Understand how to use them in a production environment
Lean Metrics
Example Police in Alexandria, Virginia (outside
of Washington, DC, USA) were told that they had a quota of 25 traffic tickets per officer per month.
What do you think was the result? Did this improve traffic safety?
True Metrics
“Tell me how I will be measured, and I’ll tell you how I’ll perform”
-People will perform to how they are measured(if you want to improve an area, pay attention to it)(Hawthorn principal)
-Traditional methods cause resistance to change > 'Old' metrics provide comfort> Metrics often used as basis for incentive
Importance of Measures
What do we do with measures?-Take time for metrics FOR A REASON-measuring only for a report is MUDA-If no action is taken from metric
results, no metric should be taken
Actions need to be in positive direction-Are we managing problems or “shooting the messenger”?
Importance of Measures
Measurement Link to Customer Value
Performance measurement must tie directly to the goal of creating value for customers
A change in the value of a performance measure should be felt by the customer of the process◦ If metrics show a change and
the customer doesn’t perceive a difference, then we’re not measuring the right things or we’ve defined our customer incorrectly
Performance measures act as both identifiers and quantifiers of improvement
opportunities
Purpose of Performance Measures
Measure
Understand
Solve
Improve
• Measurement promotes understanding
• Solutions to issues enable improved performance
• Understanding supports the generation of good solutions
Good performance measures are:1.Simple – Use metrics that are easy to capture,
compile, and update. Complex calculations or excessive work may lead people to avoid them
2.Directly impacted – Process changes should have a clear and measurable affect on the chosen measures
3.Informative – Suitable metrics may not always reveal the source of an issue, but they need to alert us when problems exist
4.Limited in number – Each area should have only 2-3 key measures
5.Visually displayed – Results should be posted for all to see
Principles for Performance Measures
Alignment: Everyone can understand if they are supporting the goals.
Feedback and Control: share information in real time to catch problems before they affect customer.
Performance improvements: metric records are basis for PDCA improvement activities.
What is our Purpose in Measuring?
Go to see the actual place Make first hand observation Talk to the people Look for current measurement tools and
methods Know the real situation - don’t rely on old
data or reports (or even new ones). Insist problems are defined from facts.
Genchi Gembutsu - Go Beyond the Numbers
Quality – First Time Through (FTT) Delivery – Build to Schedule (BTS) Flexibility – Lead Time Total Cost
Productivity Material Use Machine effectiveness (oee)
Downtime
Measurables
Definition:Measure ability to produce defect free products the first time without repair.
Key Requirements: Implementation of well-defined standards Stable/ capable processes Sound maintenance of equipment Empowered and skillful workforce
First Time Through (FTT)
1. Defect: Loss or something cannot be repaired. Example: B or C grade components/shoes
2. Rework: Any part produced out of standard, that must be repaired offline or online with/without stoppage is considered rework. (rework inside of Takt time is not included)
First Time Through (FTT)
Core Value Stream FTT=Quality Rate (Cutting) x Quality Rate (Prefit) x Quality rate (stitching) x Quality rate (Stockfit) x Quality rate (Final Assembly)
Quality rate of Cutting : Measuring in pieces
First Time Through
Total # pieces produced
Total # pieces produced – (Defect+ Rework)Quality Rate =
Total # pieces = Daily target x # of pieces per pair
Total # half pairs produced
Total # half pairs produced – (Defect + Rework)Quality Rate =
Quality rate of Stitching , Stock fit & Final Assembly: Measuring in half pairs
Quality rate of Prefit: Measuring in piecesFor embroidery, HF, Upper Molding and the like, include in Prefit…and for those that come from a “supplier” or a brown-field part of the factory – just measure the bad parts received as defects.
First Time Through
Total # pieces produced/received
Total # pieces produced/received – defectsQuality Rate =
Bottom Process FTT: = Quality Rate (Outsole) x Quality Rate (PU) x Quality rate (PH)
First Time Through
Total # half pairs produced
Total # half pairs produced – (defects + Rework)Quality Rate =
Cutting:Total # pieces produced: 10,000Defect: 10Rework: 0 =9990
Prefit:Total # pieces produced: 8,000Defect : 5Rework: 42 =7953
Stitching:Total # half pairs produced: 998Defect : 2Rework: 120 =876
Stockfit:Total # half pairs produced: 978Defect 5Rework 140 =833
Outsole:Total # half pairs produced: 1,000Defect : 22Rework: 0 =978
PU:Total # half pairs produced: 1,000Defect : 48Rework: 60 =892
Phylon:Total # half pairs produced: 1,000Defect : 98Rework: 0 =902
Final Assembly:Total # half pairs produced: 973Defect 10Rework 150
=813
Daily Customer demand: 500prs/dayFirst Time Through
Definition:Measure the ability to produce products to a plan which considers volume, mix and sequence.
Key RequirementsNo OverproductionProcess capabilityReliable material deliveryEmpowered and skillful workforce
Build To Schedule (BTS)
BTS = (volume performance) x (mix performance) x (Sequence performance)
Volume Performance = actual # of units produced
scheduled # of units
Mix Performance = actual # of units build to mix
actual # of units produced
Sequence Performance = actual # of units build to sequence
actual # of units produced
Build To Schedule
Build To Schedule
Volume Performance = actual # of units produced
scheduled # of units
Actual # of units produced = 95, Scheduled # of units = 100
Volume performance = 95/100 = 0.95
Production Plan
A.CL BW Xcellerator A.Trblnc 9
Schedule 20 30 50
Actual Production
Xcellerator A. Trblnc 9 A. Cl BW
Actual 30 60 5
Build To Schedule
Production Plan
A.CL BW Xcellerator A.Trblnc 9
Schedule 20 30 50
Actual Production
Xcellerator A. Trblnc 9 A. Cl BW
Actual 30 60 5
Mix Performance = actual # of units build to mix actual # of units produced
Actual # of units build to mix = 5+30+50= 85, Actual # of units produced = 95
Mix performance = 85/95 = 0.89
BTS = (volume performance) x (mix performance)
Volume performance =0.95 Mix performance = 0.89
BTS = 0.95 x 0.89 = 0.85 = 85%
Build To Schedule
Definition: Measure the time required for material and
products to flow through the plant from raw material warehouse to finished goods warehouse.
Key Requirements: Continuous material and information flow A focus on plant/operation constraint areas Work groups focused on waste Level /sequenced production Reduction in inventory levels Small batch size More frequent material delivery/withdrawals
Lead time
Raw MaterialWarehouse
Raw Mat’l Storage Manufacturing Lead Time FG Storage
FinishedGoodsCut Stitch
Asse
mbl
e
PackWIP
WIP
WIP
WIP
WIP
Lead time - “Dock to Dock”
Upper Value Stream L/T: Lead time of (R/M Storage W/H + Cut +Prefit + Stitching + Stockfit +Final Assembly + F/G W/H)
Outsole L/T: Lead time of (O/S + S/F + F/A + F/G W/H) PU L/T: Lead time of (PU + S/F + F/A + F/G W/H) PHYLON L/T:Lead time of ( PHYLON + S/F + F/A + F/G W/H) Total DTD is the longest of the 4 measures above.
Upper Value Stream L/T: LT of ( Raw Mtrl Storage W/H + Cut + Prefit + Stitching + Stockfit + F/A + F/G W/H)
IF/GW/HII IWIP
Cutting
WIP
Prefit
WIP
Stitching
WIP
F/A
Raw MtrlStorage area
Lead time
Outsole L/T: LT of (Outsole + Stockfit + F/A + F/G W/H)
PU L/T: LT of (PU + Stockfit + F/A + F/G W/H)
Phylon L/T:LT of ( Phylon+ Stockfit + F/A + F/G W/H)
I IIWIP
P/U
WIP
S/F
WIP
F/A
IIWIP
O/S
WIP
S/F
WIP
F/A
I
I IIWIP
P/H
WIP
S/F
WIP
F/A
F/GW/H
F/GW/H
F/GW/H
Lead time of Cutting : 4 hours ( 0.5 day ) Lead time of Prefit: 2 hours (0.25 day) Lead time of Stitching : 6 hours ( 0.75 day ) Lead time of Stockfit: 2 hours (0.25 day) Lead time of Outsole: 5 hours ( 0.62 day) Lead time of PU: 4.5 hours (0.56 day) Lead time of Phylon: 4.5 hours (0.56 day) Lead time of Assembly : 2 hours ( 0.25 day ) Lead time of F/G W/H : 1.5days
* Daily customer demand is 3,000 pairs / 8 hours working day
Upper Value Stream Lead Time:0.5 + 0.25 + 0.75 +0.25 + 0.25 + 1.5 = 3.5 days
Outsole Lead Time:0.62 + 0.25 + 0.25 + 1.5 = 2.62 days
PU Lead Time:0.56 + 0.25 + 0.25 + 1.5 = 1.06 days
Phylon Lead Time:0.56 + 0.25 + 0.25 + 1.5 = 2.56 days
Total DTD is the longest of the 4 measures: 3.5days
Lead time
Definition: Measure the actual cost to produce a unit
of production. Note : Toyota focuses on the process of waste elimination.
Cost reduction is an outcome. Key Requirements: All production system tools (physical and cultural) Activity based focus
Total Cost
Total Cost per Unit: {material + Labor + overhead + B grades + customer returns }
# of good units produced in a given period
Total Cost
Notes:
Material Cost :all material actually used (not the specification or FOB calculation) including additional issued material.
Non-material cost : Labor + Overhead + B grades + Customer returns